Avon began to roll out Becoming, an in-store shop concept at J.C. Penney stores, and broke ads from WPP Group's J. Walter Thompson Co., New York, to support the launch.
"We want to make a splash. We want to make a statement," said Stuart Sklar, group VP-retail marketing. Avon's planned advertising spending on Becoming is equal to 10% to 15% of sales, estimated to reach $10 million to $15 million this year.
The launch is backed by print ads, co-op advertising, direct marketing and sampling. Six-page inserts broke in September issues of magazines including Conde Nast Publications' Self and Vogue and Hearst Magazines' Redbook and will run through December. Co-op ads with J.C. Penney broke over Labor Day weekend in newspaper inserts and direct-mail efforts to Penney's customers drop this month. Additionally, Avon will have a strong in-store presence with sampling and signs in English and Spanish.
Avon will carry out several promotions during the fall season, including one for the launch of Becoming Sensational fragrance in October and "Kiss Goodbye to Breast Cancer," an October fund-raiser where it will donate sales of pink lipsticks to the Avon Breast Cancer Crusade, its research and education charity.
Becoming was designed specifically to avoid cannibalizing core Avon lines or the business done by the company's traditional distribution channel, the "Avon Ladies," Mr. Sklar said. The line is priced and designed to target shoppers in mass, department and specialty stores, he added. He described the line as "mass-tige" cosmetics, priced comparable to mass lines such as L'Oreal Paris and 10% to 15% below the entry-level department-store lines. Avon's previous experiment with shopping-mall kiosks selling the core line found 95% of sales were to customers who didn't shop via Avon ladies, he noted.
The Becoming shops are built around an "assisted open selling" concept where customers can browse the racks-a big difference from typical department-store cosmetics counters-or seek help from "beauty lifestyle" consultants trained by Avon. Each shop has six areas featuring color cosmetics, skincare, fragrance, aromatherapy, mother-and-baby beauty products and skincare and nutritional products for active lifestyles.
Becoming is one of several initiatives Avon has taken this year to diversify its revenue sources in the face of a soft market for direct sales. Its new Avon Wellness line of supplements, aromatherapy and home-exercise products is selling 50% ahead of expectations and could reach first-year sales of $75 million, Avon CEO Andrea Jung told analysts at a recent conference call.
At Avon's mid-quarter conference call Sept. 4, Ms. Jung told analysts Becoming locations will submit weekly sales reports, and management will know shortly how the launch has fared. Reports from Labor Day weekend have been trickling in and indicate early customer enthusiasm, Mr. Sklar said.
When analysts mentioned Penney will roll out a private-label line in the same price range, Ms. Jung positioned it as a positive, since the move demonstrates Penney's commitment to cosmetics. Avon had initially planned to launch Becoming at Penney and Sears, Roebuck & Co., but Sears announced in July it would stop selling cosmetics, arguing it was a drain on profits.
Merrill Lynch analyst Heather Hay Murren noted Penney added another 25 stores to the Becoming launch lineup, bringing the planned total to 100 locations by year-end. In a research note following the conference, she raised her expectations for the company to a 7% increase in U.S. sales (from 5.5%) thanks to increased marketing efforts, a new catalog due out in October and new products expected in the fourth quarter, such as Little Black Dress fragrance and Pure O2 skincare.
Avon planned to open 150 Becoming shops in 2001, but had to scale back those plans after Sears' exit. Mr. Sklar said Avon is in discussions now with potential partners and may announce Sears' replacement soon in order to keep with the original target of 500 stores by year-end 2002. Avon will also expand the brand to international markets, most likely starting in the U.K.; the timing of that opening is now under discussion, he said.
Contributing: Jack Neff